April 2, 2016
In the last 4 years, a cluster of players in the payments space started combining a modern day tech with a tool that gained popularity in the 90s - a mobile app and a plastic card. These players were trying to overcome the barriers that mobile wallets face (plastic has more acceptance) in the evolving payments industry and enable consumers to make payments anywhere (ah! well). The concept met with some appreciation in the beginning (mainly because of media, social networks and kickstarter campaigns) but lost the plot somewhere down the line. So, what is going on with the Card + App and Card + Wallet players? Let's discuss the challenges these players are facing in the industry.
Google Wallet Card:
Google launched Google Wallet in 2013 amidst fanfare and had some cool features such as integration with Gmail to send and receive money using the Web, Gmail or an app. Along came a plastic card as well. The physical Google Wallet Card allowed users to make purchases at point-of-sale (in stores or online) with money stored in their Google Wallets. Not every merchant or retailer supported Google Wallet so the logic of adding plastic was to increase acceptance for merchant payments. The wallet card acts as an instrument for the consumers to use money stored in a Google Wallet at numerous retailers and merchants. The physical card extends Google Wallet’s reach and provides flexibility to consumers to transfer/withdraw money and make in-store purchases at different locations without any constraints. It helped Google Wallet users to spend the money instantly, either by purchasing in-store or by withdrawing cash at ATMs, without having to wait for the money to be cashed-out (transferred) from your Google Wallet balance to bank account. Google is depreciating the Wallet Card at the end of April ‘16. It will be interesting to see if Google Wallet will continue to provide peer-to-peer transfer functionality and be accepted at fewer merchants or explore new digital payments.
Ok so you get the plot of this story. Let me give some more examples... PayPal card:
PayPal has been a dominant player in the payments industry for over a decade. Sources reveal that PayPal had planned the launch of a physical card along with an online payments app a couple of years ago. But the study suggests that the concept never saw the light of the day and the company focused on developing digital alternatives for payments instead. While the apps-and-plastic-card combination was getting a foothold in the changing payments industry, there was a buzz of all-in-one cards or multi-account cards with an app alongside. The multi-account cards allow users to store information from multiple credit, debit, loyalty and gift cards on a single device that looks and works much like a regular credit card. And now enters "Coin"...
Coin card, which was launched as the card of cards back in 2013, permitted its users to add all of their debit, credit, and loyalty cards onto one card and link it with the Coin app. The brand/product gained popularity in no time as it minimized the size of the wallet into a single card. In downtown NYC that season it was difficult to find a person not talking about the campaign by Coin. There were a few others like Coin that were launched before and after. The multi-account cards promised their simplicity and convenient tracking and budgeting features. As the time passed, the challenge for wallet cards or multi-account cards was to uphold the attractiveness among its consumers and provide enhanced solutions. In the beginning, the all-in-one cards received wide appreciation and acceptance for their simplicity and security. But with the passage of time and the litmus test of commercial acceptance, companies started to hit roadblocks as they tried to meet the expectations of thousands of users. Some of them were unable to deliver cards and some faced integration and compatibility issues at the merchants. A quick poll with those who got these cards revealed low usage.
So where are we going with all this? Using credit, debit or prepaid card has been a convenient way of payment until recently. But the new-age consumer – impatient ones, who want everything in 2-4 taps or clicks – view cards as plastic clutter that add more items to carry around and are looking at benefits beyond that. The value-added services in addition to the payment services is what consumers are looking for and just offering a card along with the app might not be meeting the expectations. With mobile based payment offerings we have seen that you gotta do more. More than just the app plus the card. So let's look at a case study here of Curve:
Curve like some of its predecessors makes life easy for consumers as it accesses all cards and accounts with just one PIN. But thats not the point. It allows users to make payments anywhere in the world without being charged hefty extras (FX and other charges). The Curve card is accepted in all the countries which support MasterCard’s network – that’s over 35 million places and access to super low foreign currency rates with no fees. One of the most attractive features of Curve is that it enables AMEX users to make payments anywhere even at places where AMEX is not accepted. The Curve app enables users to keep track of payments from all accounts and cards in real-time. The combined product allows NFC, EMV and all forms of payments. The reason of mentioning about Curve is that it is not enough to offer a vanilla card + app offering and assume that people will use it. You need to offer something more that attracts people to try out your product and keep using it. Solve problems that customers face. Such as FX rates and other charges when you travel internationally. Or that your AMEX card doesn't work at many places. Having said all that, I think the days of the plastic are far from over. And I hate to say that plastic won't be dead anytime soon. More people have credit/debit cards every quarter and are spending more with those cads. Mobile payments have taken the payments industry to a new level of convenience in payments. But the Mobile payments & wallet technologies are still in their infancy (or in their infancy of acceptance), but they are undoubtedly the future of point-of-sale transactions. The right chords have not been struck and it will take time. Mobile wallet initiatives by banks, telecom companies, financial technology providers and also governments across the globe are great steps towards better offerings. Trends indicate a strong new generation of consumer preferences for hassle-free and secure transactions that offer convenience and ease of use as well as attractive benefits. As newer technologies make it to the mainstream payments industry, we believe that the needle one day will completely move towards cardless mobile payments.